Recent Blog Posts

  • How to Write-off College Expenses and Save For Children’s Education
    As I am now a parent with three kids in college, this topic has never become more important to me than it is now.  Yes!! I have written on this topic for many years, but I certainly want to take it to a whole new level. I apologize for the self-serving article, but I hope it will many of you now and those planning for your children’s college education in the future. Let’s break this down into three distinct groups.  1) Those already stressed out and having to deal with paying for a student in college now; 2) Those of you who are already paying back student loans and are hoping for a write-off; and 3) Those of you that have the luxury of a few years before a child goes to college and don’t realize how fast it is coming. Each one of these groups has options, but needs ... Read more
  • The Power of the Health Savings Account (HSA)
      The Health Savings Account is one of the most powerful pieces of a well designed health care strategy.  It includes saving money, saving taxes, building a tax-free ‘bucket’ for health care and most importantly taking control of your own health care strategy. You save money because in order to have an HSA, you have to have a ‘high deductible health care plan’.  Well, chances are you will have a lower premium with a higher deductible and save money. You save taxes because you get a tax deduction when contributing to your HSA, right on the front page of your tax return. You build a ‘tax free bucket’ of money in an HSA, just like an IRA.  The money can be invested and the growth is tax free and withdrawals for health care are tax free. Finally, you take control of many health care decisions because you can pay cash ... Read more
  • Last Minute Tax Strategies before Filing
    Believe it or not, there are some important last minute tax strategies to consider before filing. Even if you aren’t reading this article the week before that important April deadline, there are some important ideas to consider. Most importantly, keep reading and don’t fall prey into thinking that your tax return ‘is what it is’ and there isn’t something you can do to improve your tax situation. Now if you are actually reading this before the first filing deadline, remember this year in 2018 that deadline is Tuesday, April 17th. But as you probably just noticed, I emphasized the word ‘first’, because my first last minute tax strategy is to consider an Extension. So, since time is of the essence and we are up against the clock, let’s jump into my top 4 “Last Minute Tax Strategies”. File an Extension. That’s right, don’t stress! If you aren’t ready to file ... Read more
  • Top 10 Ways to Avoid an IRS Audit
    Here is a list of the TOP 10 things TO do, or NOT do, in order to avoid an audit with the IRS.  As many of you can imagine, an audit can be expensive and time consuming, not to mention, emotionally draining experience.  Please take these to heart and I promise if you follow them you can reduce your chances of an IRS audit dramatically.    1.File your tax returns on time (even if you owe and can’t pay).  One of the quickest ways to get into an audit is to not file your tax returns.  I highly encourage you to STILL file even if you don’t owe anything or don’t have any income.  The IRS is like a boyfriend or girlfriend, if you don’t stay in touch, they will assume the worst. They’ll also say bad things about you to all of their friends, which could be other governmental ... Read more
  • The SUV and Truck Deduction in 2018 – An Unexpected Loophole
    Remember the good old days when you could write-off 100% your new SUV or Truck under the 179 deduction?  That was the wild wild west (pre-2006), and then we all became quickly familiar with the $25,000 cap on writing off these gas guzzling vehicles. However, the game has changed with possibly an unintended loophole under the new Tax Cuts and Jobs Act (TCJA).  The silver bullet: Bonus Depreciation. A little history lesson first Section 179 allows certain assets to be deducted in one year if a section 179 election is made, but places a maximum deduction of $25,000 on what it classifies as sport utility vehicles (any four-wheeled passenger automobile between 6,000 and 14,000 pounds). This deduction was formerly known as the Hummer Deduction as business owners flocked to buy large SUVs as soon as it was enacted. However, most large SUVs cost a lot more than $25,000, so the ... Read more
  • A Renewed Look at Rules for Foreigners Investing in Rental Property in the U.S.
    Foreign investment in U.S. real estate has continued at a quickened pace since the “Great Recession.”  The opportunity to pick up a piece of the American dream at a reduced price (especially in the years immediately following the crash) has stoked the flames to a resurgent market which has almost replaced all lost value. More and more foreign investors have taken advantage of the opportunity to invest in U.S. real estate because the gains in value, but also because the U.S. has a lot of land to house all 3.25 million of its residents. While people move closer to larger American cities, more people have begun to acquire real estate in urban areas, including both foreign and domestic investors. For foreign investors, the rush to capitalize on millennials moving from mom and dad’s in the suburbs back to the city deserves a new look at some old issues discussed ... Read more
  • How much Money should I send in with My Personal Extension?
    Not your favorite topic… I know.  But I’m SO PROUD of you for reviewing this article. No one wants to pay extra penalties for not making a deposit with the IRS.  So I want to give you a few tips to make sure you understand the rules when it comes to filing a personal extension. Remember an Extension is NOT an “extension” to pay any taxes you may owe, but an “extension” to file. Now some of you may say…”well, I’m not going to send in any $$ so I’ll just forget the extension all together”.  NOT GOOD!!  The Extension (Form 4868) is more important than the deposit of $$. IT’S CRITICAL you still file an Extension!! The failure-to-file penalty (in other words failure to file an Extension) is more than the ‘failure-to-pay penalty’ and you don’t want to compound the problem by not filing an Extension. So back to ... Read more
  • Pay Your Taxes by Credit Card and Score some Points
    How many of you build, track and utilize credit card points for personal benefit?  It’s a great tax strategy (credit card point redemption benefits are currently tax free), AND it’s an added bonus when you have to pay one of the most dreaded bills of the year. No matter how you file your income tax return—by mailing a paper copy or electronically—you can pay your taxes using a major credit card or a debit card online. Individuals can make these payments 24 hours a day, seven days a week, using certain cards as long as they follow the proper procedure. There are actually several advantages when turning to a credit card to pay your tax bill: Delay paying the actual cash for your taxes Hopefully get a lower interest rate than the IRS would give you if you were on a payment plan Avoid any penalties if you don’t have ... Read more
  • The Hidden Power and Benefits of a College Education IRA
    Ok…so the real name of an IRA that can be used for education expenses is called a Coverdell Education Savings Account (Coverdell ESA).  However, for simplicity sake, we in the accounting world generally refer to these powerful little gems as the “Education IRA”. Regrettably, not everyone in the accounting world believes the Education IRA to be a precious gem.  Mostly because they don’t understand their hidden benefit and strategy.  Thus, in my opinion, the 529 college savings plans are oversold to the public and no one really talks about the Education IRA. Let me set the record straight and share what I think to be one of the most incredible ways to save for college education. First, the good news: Think of a Coverdell ESA as simply an IRA…any investments inside the IRA grow tax free and come out tax free for any qualified education expenses (typically tuition, books, fees, ... Read more
  • What Expenses can I Write-off on My Next Business Trip?
    Recently, I’ve had a lot of inquiries about what may or may not be deductible on a business trip. Frankly, this isn’t very surprising due to the passage of the new tax legislation, known as the Tax Cuts and Jobs Act (“TCJA”). The elimination of the entertainment expense and the collateral damage it’s wreaking on the meals expenses has many worried about their business travel, and related leisure. Some believe that all of these expenses have left the harbor never to return, and regrettably their concerns are valid. Let me shed some light on the situation and help provide a little clarity. As usual, the best way to do this may be to use an example of an upcoming business trip common to many.             Example: You are scheduling a trip for an annual conference and training that takes place out of state. The purpose of the meetings will be ... Read more
  • Writing off Dining and Food Expenses in 2018
    Well, things have changed in 2018 when it comes to writing off meals and food expenses in your small business…and frankly that’s for any size business.  Large or small, business owners have to reevaluate their budget for the food they were able to deduct in the past. In the past, (2017 and earlier) business owners were able to deduct 100% certain food or dining items, now they are 50%. Also, there were certain items that were deductible up to be 50% in 2017 and earlier, AND now some of those have disappeared all together. Let’s break it down into some bite size pieces (sorry I couldn’t resist). Here’s what is now 50% (previously a 100% write-off): Meals to hold a required lunch meeting on the business premises with your employees (not with your business partners or clients). Meals to hold a required business meeting with your employees at an offsite ... Read more
  • Is Redeeming Airline Miles or Points Taxable?
    I know I’m not covering new territory here, but January is a little depressing – right? I mean, it’s cold, the holidays are over, your football team has probably already been eliminated from Super Bowl contention (ok – not you, Patriots fans), and did I mention that it’s cold? It’s also the time those credit card bills start to show up from all that December spending. Maybe it’s time to redeem those credit card points or miles you’ve been saving up and jump on a plane headed someplace warm. How about Miami, or maybe Maui? Sounds exciting, right?! Well, before you start clearing your calendar, think about this – redeeming those points or claiming your rewards may be a taxable event. Yes, I know it’s surprising, but the IRS looks everywhere when it comes to finding opportunities to collect revenue. Ok, now that I’ve interrupted your daydreams of sipping a ... Read more
  • Entertainment Expense is Gone in 2018
    Yes…you read it correctly.  There are a lot of benefits for the small business owner in the Tax Cuts and Jobs Act, but this isn’t one of them. It truly is a major blow to small and big business, and the cost of doing business just went up.        Example. Tom is an insurance agent and small business consultant. He takes one of his clients golfing and out to lunch to give guidance on a business transaction and sell an insurance policy.        Write-off? Nope. Because the activity occurred in 2018, Tom gets no deduction and arguably the meal isn’t a write-off either. First, all small businesses and entrepreneurs are affected; no one is exempt from this provision in the new tax law. Sole-proprietors, S-Corporations, LLCs and C-Corporations – all beware. Prior law So long as an expense was directly related to (or, in some cases, even ... Read more
  • Has the Estate Tax been Repealed and What about the Gift Tax?
    There has been a lot of talk about the myriad of tax law changes with the passage of the “Tax Cuts and Jobs Act” (TCJA), but let’s not forget about the estate tax. Although the House of Representatives’ version of the recent tax bill had included language to repeal the federal estate tax in its entirety by the year 2025, the final version that was signed by President Trump did not repeal the estate tax. Instead, the TCJA doubled the estate tax exemption from $5.49 Million to $11.2 Million (taking into account inflation). Of course, the average American’s net worth is far less than this and maybe that’s why no one is talking about it, but I thought it was at least worth a short article to set forth the facts. This means that even less Americans will pay federal estate tax. Thus, if an individual is worth less than $11.2 ... Read more
  • 1099 Rules for Business Owners in January 2018
    Over the past few years there have been a number of changes and updates regarding the reporting rules for the mysterious 1099-Misc Forms.  I say “mysterious” because many business owners simply guess as to what the rules are and oftentimes get exasperated and just give up choosing to file nothing at all.  This can be a dangerous result as the penalties can add up quickly. First, the general rule is that business owners must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You don’t need to issue 1099s for payment made for personal purposes. You are required to issue 1099 MISC reports only for payments you made in the course of your trade or business. The penalties for not doing so can vary from $30 to $100 per form, ... Read more